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Massive eCPC Bid Getting Super Cheap Results

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hey everyone,

 

The company that I work for also works with several advertising agencies, and I've been tasked with getting up to speed on AdWords and keeping track of the agencies' performance.

 

There's one campaign in particular that I'm super confused about, and because of a bit of a language barrier I'm not totally sure I understand the agent's reasoning for their decision - though I definitely can't argue with the results.

 

Some background: I work for an app company, our average CPI is $0.8-$1.2 depending on the country, but we're targeting SEA pretty heavily right now (hence the low prices.) 

 

The agent has set up a search campaign using just two keywords, an exact match of our app's name, and a phrase match of our app's name and our top keyword.

 

The ads in the campaign are all standard 'wow so great check it out' stuff. But the ad group (only one) is set up to use eCPC. The daily budget for the ad group is $100.01, and the maximum bid per click is also $100.01. However, the average CPI for this ad group is less than $0.10.

 

I'm having a hard time understanding what's going on, because we have other agencies using search campaigns in the same countries, as well as our own in-house campaigns, and we're all using both of the keywords listed by this mysterious eCPC campaign, and across the board our results in terms of pricing and conversions are being outperformed. 

 

So basically I'm curious about what this strategy is - setting your eCPC bid == your ad group's budget. What sorts of situations does this work in?

1 Expert replyverified_user

Re: Massive eCPC Bid Getting Super Cheap Results

[ Edited ]
Top Contributor
# 2
Top Contributor

Hi @Brandon K I'll admit I'm not totally sure I've understood what it is that you're asking about, but if it's the budget = max bid issue, I'll answer that.


To be honest, I see no benefit to it and can think of no reason why it should have any effect on performance (and, incidentally, I see no reason for the 1c addition either).  There's an awful lot of myths and superstition based "tricks" for AdWords, almost all of which have no basis and no effect, and I suspect we're seeing one of those here. 

 

How you use the Max CPC figure depends upon your objectives.  This figure is, obviously, the maximum amount you're prepared to pay per click so if you don't care what you pay per click, there's no reason why you shouldn't make it some figure that's far far higher than your typical actual CPC.  However, it's a rare advertiser that really doesn't care about their click costs, especially in a direct sales situation such as yours (it's more common in a branding exercise where the client wants to spend X in Y days and wants to be #1 for all possible impressions).  Setting a Max CPC way higher than your typical bids may not seem like a problem when you're looking at averages, but there could be hidden costs in there that could be avoided by setting a more realistic Max CPC.

 

There are two key ways in which setting a ridiculously high Max CPC can damage your performance.  The first is related to variations in how your clicks cost.  You may already be aware that AdWords is rarely totally consistent over time.  There are usually variations from day to day and hour to hour (and often week to week, month to month).  So for example, you may find that between 4 and 5pm, your average CPC is $0.10 and your conversion rate 10%, but between 8am and 9am your average CPC is $0.15 but your conversion rate only 2%.  In such a situation (and obviously you'd need to look at the whole day, for data over a decent period of days or weeks) it would make sense to set a Max CPC around $0.14 or possibly a little lower so you limit how much you spend in those periods where conversion rates are lower, allowing more budget (if limited) to those times when the rates are higher.  A Max CPC of $0.14 will still give room for the $0.10 CPCs at the good times, but will reduce the higher bids at the lower rate times (bear in mind that since these are averages an average of $0.10 could mean one click at $0.15 and another at $0.05).

 

The second risk comes from competition.  Let's say your Max CPC is just $10, still 100x your usual cost per click.  If a competitor comes along who also sets their Max CPC to $10, in theory you could end up paying $13 for a single click (with the competitor in position #2 paying $12.99).  Enhanced CPC allows for a bid "boost" of up to 30%, and the final bid could be even higher if you have other adjustments for location or device.

 

So, in short, there's no secret "trick" to my knowledge about setting the Max CPC to the same as the Budget, nor in having the budget as $100.01 (one cent above).  Secondly, there's no clear benefit in having a Max CPC so much higher than your typical actual CPC and several reasons why it might be harming your performance.

 

I hope this helps.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: Massive eCPC Bid Getting Super Cheap Results

[ Edited ]
Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭

Thanks Jon.

So I've been told by multiple people that if your analysis leads you to a bid of say $1.00, that you should bid $1.01 or $1.05 or something, because your average cost will still be about $1 but your ad will be preferentially selected over a competitor with a similar quality score but a bid of $1.00 or $0.99 is that a myth, then? Maybe only applies in certain bid strategies?

I guess what I'm most curious about is why their ads are beating out other agencies and our own ads (in terms of cost) despite a much higher bid.

I wonder if it could be because our quality score is low (as our landing page is the app store, not our own site) and their massive bid is compensating for that?

Re: Massive eCPC Bid Getting Super Cheap Results

Top Contributor
# 4
Top Contributor

Hi Brandon,

 

The average CPC is exactly that, an average, so if you're seeing an average CPC of $1, that means that your actual CPC costs vary either side of that figure, so if you want to keep your average at $1, your Max CPC needs to be higher than $1.  As a simple, two-click example, if you have one click at $1.50 and one at $0.50, their average is $1, but in order to get those two clicks you'd need to have set a Max CPC of at least $1.50 (after bid adjustments, etc.).

 

I'm not sure I understand your second point:

 

"I guess what I'm most curious about is why their ads are beating out other agencies and our own ads (in terms of cost) despite a much higher bid."

 

In what way do you mean "beating out"?  Are you asking why the average CPC is so low when the Max is so high?  Or why one set of Ads shows higher than another?  Sorry if I'm being dense, can you explain please?

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits